Regardless of where you start, the disclosure requirements of the entity reporting on Climate requirements should eventually meet standard interoperability and hence a guidance is a must. Starting from high level to down to detail low level. There are general requirements and then specific ones e.g. climate related requirements. The interoperability guidance is aimed at increasing efficiency for entities to report under whatever set of standard is required to be met so that the Entity's business can then start focusing on managing what is reported and improving the business to become long term sustainable as well as reducing negative impact on climate, environment and society. That's why when it comes to reporting for your business, currently there is a pic and choose instead of it being mandatory when it comes to Sustainability, Climate impact, Environment, Nature and Human rights. We will continue to see increase or decrease in focus, attention, detail and data requirements from reporting/disclosure frameworks as we progress towards 2030, the world has to address the triple planetary crisis of Climate Change, Nature Loss and Pollution - the businesses have a strong role to play, specially if a business is itself extractive or funds extractive business operations..
Very Soon all standards/frameworks for disclosers and reporting will start telling you if you start from one how do you report on requirements of another set of standard. Interoperability if the key. Because some of the disclosures are Voluntary and not mandatory in nature its advisable to start from one that closely aligns with the nature of your business and work towards closing gaps or addressing additional requirements. Good thing is that none of the enforcement bodies have taken out their ruler to strike on your knuckles for not achieving a complete 10/10, they are all saying 'start and we shall help you.....'
Below is a high level aspect comparison between sustainability/ESG reporting frameworks. Key item to note - They are disclosures, need strong governance from Board levels and they cater to at least Employees, Customers and Investors in all cases and then beyond!
These are not to be seen as mere regulation check box exercises but a good strong analytical look at your business & supply chain and their impact on people, nature and planet.
** Expect future amendments- these are not security contracts but a living document of performance and it will change
** These reports are our stories of improvement, change and success. so don't treat them 'just a piece of fact' or 'how to best distort it'. Rather our journey of Adulting through a crisis and owning up.
Aspect | CSRD | CSDDD | ESRS | GRI |
Objective | Enhance and standardize sustainability reporting | Ensure due diligence on human rights and environmental impacts in company operations and value chains | Provide detailed standards and guidelines for sustainability reporting as per CSRD | Provide a global framework for sustainability reporting, covering ESG aspects |
Scope | Companies listed on EU regulated markets, large companies, and certain non-EU companies | Large EU companies and certain non-EU companies operating in the EU with significant business activity | Applies to entities within the scope of CSRD for standardized sustainability reporting | Global application, suitable for all organizations regardless of size, sector, or location |
Effective Date | Phased implementation starting from fiscal year 2024 | Expected to come into effect in 2026 | Integrated with CSRD timeline, starting from 2024 | GRI Standards are continuously updated, with the latest version effective from 2023 |
Key Requirements | Detailed sustainability reporting covering environmental, social, and governance (ESG) issues | Due diligence obligations to identify, prevent, mitigate, and account for human rights and environmental impacts | Detailed disclosure requirements on ESG aspects, ensuring consistency and comparability of reported information | Comprehensive set of sustainability reporting standards focusing on economic, environmental, and social impacts |
Reporting Standards | European Sustainability Reporting Standards (ESRS) | Compliance with due diligence frameworks and standards | Comprehensive reporting standards detailing specific ESG metrics and disclosures | GRI Standards (GRI 1: Foundation, GRI 2: General Disclosures, GRI 3: Topic-specific Standards) |
Disclosure Requirements | Broad range of ESG metrics, double materiality principle (both financial impact and impact on environment/society) | Policies, processes, and outcomes related to human rights and environmental due diligence | Specific disclosure requirements under different ESRS categories (e.g., climate change, biodiversity, social issues) | Disclosures on a wide range of ESG topics, structured around economic, environmental, and social dimensions |
Target Companies | Large companies meeting two out of three criteria (net turnover > €40 million, balance sheet total > €20 million, > 250 employees) | Large companies with > 500 employees and net turnover > €150 million; non-EU companies with > €150 million turnover in the EU | Companies within CSRD scope, including large and listed companies | All organizations, including companies of all sizes, NGOs, and public sector entities |
Enforcement | National competent authorities, with penalties for non-compliance | National authorities with the power to impose sanctions, including fines and remediation actions | Part of CSRD enforcement mechanisms, ensuring compliance with reporting standards | Voluntary adoption, but often mandated by investors, stakeholders, and regulatory bodies as part of reporting requirements |
Stakeholder Impact | Investors, customers, employees, regulators, and the public | Affected communities, workers in the supply chain, NGOs, and other stakeholders concerned with human rights and environmental impacts | Investors, regulators, the public, and other stakeholders relying on standardized and comparable sustainability information | Investors, customers, employees, regulators, NGOs, and the public interested in an organization's ESG performance |
Audit Requirement | Mandatory external assurance for reported information | Not explicitly required, but companies must have processes in place to comply with due diligence requirements | Assurance as part of CSRD requirements, ensuring reliability of disclosed information | Not mandatory, but external assurance is recommended to enhance credibility |
Governance | Management and board-level responsibility for sustainability reporting | Board-level oversight and integration of due diligence into company policies and risk management | Implementation guidance for companies to align with ESRS within the CSRD framework | Guidance on governance disclosures, including board responsibilities, ethical standards, and stakeholder engagement |
Materiality | Double materiality principle: financial materiality and impact materiality (environmental and social impacts) | Focus on material adverse impacts on human rights and the environment within company operations and value chains | Aligned with CSRD's double materiality: financial impact and impact on environment/society | Emphasizes stakeholder inclusiveness and sustainability context to determine material topics; uses a broad stakeholder-based materiality approach |
Interoperable Taxonomy | WIP | WIP | WIP | Yes, interoperability with other frameworks |
Digital Taxonomy | Yes | Yes | Yes | Yes |
Categories of Disclosures | - Environmental matters - Social and employee matters - Respect for human rights - Anti-corruption and bribery | - Governance strategy and risk management - Climate-related risks and opportunities - Targets and performance indicators - Scenario analysis | - Environmental disclosures - Social disclosures - Governance disclosures | - Economic performance, - Environmental performance, Social Performance, Governance |
In this context, tell me what struggles you have and I will try to help you.